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Raising the Floor: The Minimum Wage and What it Means to You

Submitted by Christo on July 29, 2016 - 9:41am

Raising the Floor:
The Minimum Wage and What it Means to You

By Ben Isitt

In April 2016, British Columbia achieved the dubious distinction of having the lowest minimum wage in the country. This occurred after New Brunswick, a perennially under-performing jurisdiction where housing and other necessities of life are more affordable than BC, raised its minimum wage to $10.65 per hour.

The wage floor in British Columbia had crept up a few months earlier – from $10.25 to $10.45 in September 2015 – at the same time that Premier Christie Clark announced that, henceforth, increases in the minimum wage would be tied to Consumer Price Index (CPI). This announcement, which had a veneer of fairness and common sense, ignored intensive advocacy on the ground in BC for a major increase in the minimum wage – to the emerging North American standard of $15 per hour.

If the Premier abides by this commitment and holds future increases to the CPI, the gap in earnings between minimum-wage workers in BC and the rest of Canada and North America will likely grow.

British Columbia hasn’t always been the national laggard in setting the income floor for the lowest-paid workers. In 2001, the province led the country with a minimum wage of $8 per hour. However, this rate was slashed by a third for young workers when Gordon Campbell became Premier and introduced a “training wage” of $6 per hour (applied to the first 500 hours of employment). The $8 wage for other workers remained stubbornly frozen for the next decade, at the same time that the cost of living increased by about 15 per cent. BC’s lowest-paid workers were pushed deeper into poverty, as inflation eroded real take-home income in the face of stagnant wages.

Today, more than 100,000 British Columbia workers earn the minimum wage. About two-thirds of these workers are women. Contrary to assertions by business lobby groups, these workers are not primarily teenagers starting out in the labour market; nearly half of all BC workers earning the minimum wage are age 25 or older.

Origins of the Minimum Wage

Minimum wage legislation was first introduced in the late 1800s in response to working-class campaigns against sweatshops and harsh working and living conditions that accompanied the Industrial Revolution. New Zealand became the first country in the world to adopt a national minimum wage law in 1894, followed by the Australian state of Victoria in 1896 and other state and the federal statutes. Great Britain adopted minimum wage legislation in 1909 and other European countries followed.

Early minimum wage legislation was often based on government-appointed boards that set wage rates in specific industries. Because women and children were disproportionately employed in sweatshops and other low-wage occupations, many of the first minimum-wage decisions applied to these workers.

In Canada, minimum wage legislation was slower to emerge, with the first steps involving “fair wage policies” to improve conditions for workers employed on government-funded public works contracts. Many unions shunned specific demands for reforms to worker rights, favouring instead the radical Marxist demand for “abolition of the wage system” – a transition beyond capitalism – rather than “palliative measures” that would distract workers and prolong capitalism’s demise.

In the North American context, Massachusetts became the first jurisdiction to adopt a minimum wage law in 1912, introducing pay standards for women and children, but the law was criticized for lacking enforcement, with companies that refused to pay the mandated wage incurring no penalty beyond having their name published in the newspaper. At the time, there was concern in the United States that minimum wage laws infringed on freedom of contract, a right entrenched in the thirteenth amendment to the US Constitution. (In 1923, the US Supreme Court struck down the minimum wage law in the District of Columbia on this basis).

In Canada, there was no constitutional barrier to minimum wage legislation. In 1918, the Women’s Minimum Wage Act was introduced in the British Columbia legislature, reflecting pressure from labour organizations and the Minimum Wage League, as well as newly elected MLA Mary Ellen Smith (the first woman elected to the BC legislature and the first woman in the British Empire to serve as Cabinet minister and Speaker of the House). Smith won a January 1918 Vancouver by-election on a platform that included a “minimum living wage for women workers” and “equal pay for women with men for equal work.” As a delegate from the Minimum Wage League declared in response from a lukewarm statement from the Premier: “We will sit on the steps of the parliament buildings until we are heard.”

Helena Gutteridge, labour organizer, future Vancouver City Council member, and advocate for British Columbia’s first minimum wage law: “We will sit on the steps of the parliament buildings until we are heard,” Gutteridge declared in 1918 – a month before the Minister of Labour introduced the Women’s Minimum Wage Act.

The BC legislation, introduced by the Minister of Labour in March 1918, established a minimum wage board to regulate wages for women in specific industries at a level “adequate to furnish the necessary cost of living.” However, the Board calculated wage rates at the level of subsistence of a single woman, ignoring the fact that many women had dependants and needed to save for sickness and old age. BC was the second province to adopt minimum wage standards, after Alberta amended its Factories Act in 1917 to mandate a minimum wage of $1.50 per shift for all workers covered by the legislation (irrespective of gender) and $1.00 per shift for apprentices. By 1920, all Canadian provinces with the exception of New Brunswick and Prince Edward Island had adopted minimum wage legislation for women workers, reflecting demands for social change at the end of the First World War.

In 1925, British Columbia went a step further, introducing the Men’s Minimum Wage Act, which attracted considerable interest from across North America because of its application to male workers. Like the earlier legislation, a three-member board was appointed to set the wage rate in specific industries, chaired by the Deputy Minister of Labour with a representative of labour and employers. The first two rulings of the Board established a minimum wage of 40 cents per hour for men employed in the lumber industry and restaurants and catering. This contrasted to wage rates of between 28 cents and 33 cents per hour for women in a dozen industries – a wage gap that saw men earn roughly a third more per hour than women for comparable work.

While the legislation and regulations governing the minimum wage in BC were amended from time to time, legislated wage parity between men and women workers would not be achieved until 1972, when the Dave Barrett NDP government eliminated the gendered distinction of wage rates by introducing a uniform (and strengthened) minimum wage of $2 per hour (increased immediately from $1.50 and over the government’s term of office by 67% to $2.50 per hour). The United States had moved toward uniform standards a generation earlier, with the Fair Labor Standards Act (1938) establishing a national minimum wage for male and female workers.

Organized Labour and the Struggle for Minimum Employment Standards

Workers who enjoy the benefits of union protection and a collective bargaining relationship with their employer are often insulated from the desperate economic conditions faced by low-wage workers, whose income is insufficient to provide for the basic necessities of life. However, even within unions, there is wide variation in hourly wage rates and income between workers in different sectors and occupational groups. These variations reflect the pattern of collective bargaining, economic conditions in each sector, and the strength of union members in relation to employers.

In British Columbia today, a full-time worker earning the minimum wage of $10.45 per hour receives a total income of less than $1900 per month, while the average cost of a 1-bedroom rental apartment is approximately $900 per month, depending on place of residence (with rents exceeding $1000 in Metro Vancouver). Rent under this scenario approaches or exceeds 50% of the worker’s gross earnings, while the Government of Canada through the Canada Mortgage and Housing Corporation identifies 30% as the desirable maximum housing cost as a proportion of total earnings, to leave workers with sufficient income to cover other necessities of life.

The gap between the total income earned by a full-time minimum wage worker and the actual cost of living has given rise to the concept of the living wage – the amount of income a worker requires to cover the basic cost of living (housing, food, clothing, transportation) and live with dignity rather than in poverty.

The labour movement in British Columbia, recognizing the threat to the wellbeing of all workers and the health of society generally from a persistent pool of low-wage workers trapped in poverty, has advocated for policies to support a living wage. In Metro Vancouver, the living wage (calculated annually based on actual costs of goods and services) currently exceeds $20 per hour – nearly double the current legislated minimum wage rate.

Seattle City Council member Kshama Sawant, a self-described Socialist, is an unapologetic advocate for workers’ rights and helped spearhead the grassroots movement that culminated in that City’s adoption of a $15/hour minimum wage.

The Fight for Fifteen

Minimum wage is a hot topic in British Columbia and across North America today. This reflects growing frustration and mobilization among minimum-wage workers, including a disproportionate number of women workers, workers of colour, immigrant workers and workers employed at “McJobs” in the tertiary services sector.

Responding to this political pressure, major cities including Seattle and Los Angeles have embraced a transition to a $15-minimum wage. The State of California recently announced that it too would legislate a $15 per hour minimum wage – a policy that is estimated to increase the income of 43% of workers in the state, which has a larger population than Canada.

In British Columbia, progress has been slower. The current Provincial government relies heavily on the business community as a base of political support, and operates at arm’s length from the British Columbia Federation of Labour and unions advocating for an increase in the minimum wage.

British Columbia also has a different division of powers compared to the United States; municipalities (which are closer to the people, and therefore more amenable to grassroots mobilization campaigns) lack jurisdiction over wages and other areas of worker rights, which are constitutionally the responsibility of the provinces and territories (and the federal government, in some industries). BC’s initiative and referendum process, though distinct in the Canadian context, is more onerous than procedures in the United States, where ballot initiatives have provided impetus to legislative action (for example, in California).

The “Fight for $15” movement here in British Columbia therefore lacks a clear “stepping stone” strategy analogous to the United States, where local wins can be translated into province-wide legislation.

Raising the Floor in BC

As the cost of living for housing and other social goods continues to rise in British Columbia, and the lowest-paid workers continue to live in poverty and fall further behind workers in other occupational groups and other provinces, pressure will intensify on the BC government to raise the floor.

Legislated improvements in the minimum wage provide a more cost-effective mechanism for improving workers’ incomes than the provision of direct income support payments from the state. Increases to the minimum wage also help to improve standards for labour generally, strengthening the bargaining position of the provincial workforce as well as workers in specific sectors. Health outcomes are also improved as workers have more disposable income.

Union members and other workers, who are insulated from the worst economic pressures faced by minimum-wage workers, would be wise to lend their voice and organizational muscle to the movement for a substantial increase in the minimum wage in British Columbia and elsewhere in Canada. A meaningful raise for the lowest-paid workers is long overdue.

Ben Isitt is a historian and legal scholar specializing in labour relations and social movements in British Columbia. Ben also serves the public as a city councillor and regional director in Victoria.